Northgate eyes tax hike

In a very close vote Monday night, the Northgate School Board opted not to include a property tax increase in the district’s proposed 2018-19 budget. Taxpayers, however, could see that decision change before the final budget is adopted in late June.

The Northgate School District currently ranks eighth highest in property taxes in Allegheny County, with a millage rate of 24.7867 mills. That means property owners pay nearly $25 for every $1,000 in assessed value. For a property assessed at $100,000, the owner would pay the Northgate School District nearly $2,500 per year.

Under the state Act I legislation, school districts are limited on how much they can raise property taxes without voter approval. For Northgate this year, the limit is 3.2 percent, or .7923 mills.

Northgate’s proposed budget for the coming fiscal year totals $25,150,188, with a projected deficit of $2.5 million that could be made up by transferring monies from the reserve fund balance, which currently stands at $11.3 million. Another $1.5 million of the fund balance is set aside for capital improvements in 2018-19.

As part of its budget presentation this year, Northgate business manager Chris Ursu projected the reserve fund balance dwindling to $2.5 million, with annual budget deficits between $1.5 and $2.5 million through the 2020-21. Those projections are subject to change, of course. In the 2016-17 fiscal year a projected deficit turned into a $1.5 million surplus. A deficit of more than $300,000 was estimated for the 2017-18 school year, and the district now expects to end up with a surplus of more than $600,000.

The board has discussed the potential need for annual tax increases, particularly to help fund the capital improvements that will be needed over the next few years. Originally, however, discussions ended with a plan to start increasing taxes in the 2019-20 fiscal year. At the board’s committee of the whole meeting on Monday, finance committee chair Daniel O’Keefe said that after reviewing the projected deficits, “the committee thought it was prudent to start this year instead of waiting until next year.”

Board members Michael Rajakovic and Shannon Smithey supported the increase. “There’s a major deficit coming,” Rajakovic said, while Smithey noted that failing to raise tax rates in the past had gotten Northgate into a financial hole, and the hole would just get bigger if the district put off the inevitable tax hikes.

“I think we don’t have a choice,” said board member John Gratner, who repeated O’Keefe’s statement that the tax increase this year would cost the average household about $75 in the coming year.

If the district increases taxes by a similar amount in each of the next five fiscal years, however, that $75 increase ultimately could cost taxpayers another $400 per year in a very short period of time.

Board president Gary Paladin and member Jennifer McWilliams pointed to the district’s fund balance as a reason not to increase taxes this year. Paladin said that Northgate’s fund balance currently is equal to 43 percent of the total general fund balance, although the district has assigned much of that amount to specific future expenditures such as pension contributions, budget deficits and capital improvements, leaving only $2 million of the current $11.5 million unassigned. That is precisely the cut off level that allows Northgate School District to increase taxes under Act I, which prohibits the district from increasing property taxes if the unassigned fund balance is over 8 percent of the general fund operating expenses.

There is “a perception that we’re hoarding all this money,” said board member Amy Joy Robinson.

“It’s hard to swallow,” agreed McWilliams.

O’Keefe’s motion to advertise a proposed budget based on the increased millage rate of 25.5798 was defeated in a 5-4 vote. In favor were O’Keefe, Smithey, Rajakovic and Gratner. Opposed were Paladin, McWilliams , Robinson and board members Tim Makatura and Christine King.

A second motion, advertising a proposed budget at the current millage rate, was approved in a 6-3 vote, with O’Keefe, Smithey and Rajakovic opposed.

The proposed budget should be available on the district’s Web site. The final budget will be up for a vote at the board’s regular meeting in June.